Last Year’s National Pension Fund Return 10.86%‥Fund Management Headquarters Performance Bonus 68% of Base Salary

[Asia Economy Reporter Park Soyeon] Last year, the financial sector operation return rate of the National Pension Fund was confirmed at 10.86%, resulting in this year’s performance bonus payment rate for the Fund Management Headquarters being set at 67.7% of the base salary.

The National Pension Fund Management Committee held its 4th meeting on the 1st at the President Hotel in Jung-gu, Seoul, where it deliberated and resolved the "2021 National Pension Fund Operation Performance Evaluation" and the "2021 National Pension Fund Management Headquarters Performance Bonus Payment Rate."

According to the report, last year’s return rate on the National Pension Fund operation was confirmed at 10.86%, a slight increase from the previous year (9.58%). This figure matches the fund evaluation results reported by the Ministry of Strategy and Finance to the Cabinet meeting in May.

Since the establishment of the Fund Management Headquarters within the National Pension Service, achieving a double-digit return rate has occurred four times: in 2009 (10.8%), 2010 (10.6%), 2019 (11.34%), and now this year.

According to the committee, last year’s return rates by asset class were 29.77% for overseas stocks, 23.97% for alternative investments, 5.88% for domestic stocks, 7.26% for overseas bonds, and -1.25% for domestic bonds, with the rise in returns from alternative investments and overseas stocks driving the overall fund return rate.

The performance bonus payment rate of 67.7% represents a 19 percentage point decrease from the previous year (86.7%), due to the excess return over the benchmark rate dropping from 0.99 percentage points to 0.04 percentage points.

The performance bonus payment rate reflects the performance of the most recent three years, weighted at a ratio of 5:3:2 for each year’s results.

Meanwhile, the committee finalized policy proposal tasks for 2022 aimed at enhancing National Pension performance.

These include ▲ establishing a system to strengthen asset allocation flexibility for diversifying sources of returns ▲ reviewing and improving risk management system operations ▲ examining the validity and consistency of benchmarks for evaluating alternative investment performance.